3. On January 2, 2013, Miller Properties paid $19 million for 1 million shares of Marlon Companys 6 million outstanding common shares. Millers CEO became a member of Marlons board of directors during the first quarter of 2013. The net book value of Marlons net assets was $66 million. Miller estimated that the fair value of those net assets was the same except for a patent valued at $24 million above cost. The remaining amortization period for the patent is 10 years. Marlon reported earnings of $12 million and paid dividends of $6 million during 2013. On December 31, 2013, Marlons common stock was trading on the NYSE at $18.50 per share. Miller Company has no intention of disposing of this stock in the near future.

REQUIRED:

a) Assume that Miller Properties does not exercise significant influence. What entries should Miller Company record in 2013 for its investment?

b) Assume that Miller Properties does exercise significant influence. What entries should Miller Company record in 2013 for its investment?